Number of tracker products falls to nine-year low

Since the Bank of England’s Base Rate rise in November, the number of tracker rate mortgage products has fallen to the lowest number since September 2009, according to new Moneyfacts data.

Rozi Jones

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12th February 2018

"The two-year SWAP rate increased by 0.15% in just one month, which is particularly significant, as this was an early sign of the base rate rise that occurred last November."

Since the Bank of England’s Base Rate rise in November, the number of tracker rate mortgage products has fallen to the lowest number since September 2009, according to new Moneyfacts data.

The number of tracker products available on the market now stands at 268, down from 294 in February 2017 and 274 in November.

Additionally, since November when the average tracker hit a low of 1.93%, rates have increased to 2.15%.

Charlotte Nelson, finance expert at Moneyfacts, said: “The number of tracker rate mortgages on the market has been in steady decline for some time. However, following the Bank of England Base Rate announcement, the number of tracker deals on offer has fallen from 296 in July 2017 to 268 today, reaching the lowest number of deals since September 2009.

“Back in 2009, providers were unsure of how to price their variable products and opted instead to withdraw them entirely. A similar scenario appears to have occurred this time around, with providers questioning how to price their deals, particularly with talks of a further base rate rises this year.

“The talk of multiple base rate rises this year has started to become more than just gossip, with SWAP rates starting to rise again. The two-year SWAP rate increased by 0.15% in just one month, which is particularly significant, as this was an early sign of the base rate rise that occurred last November.

“The fact that the markets are already starting to factor in multiple base rate rises makes the tracker rate market particularly unstable. In uncertain times providers are more likely to concentrate their efforts on fixed rates rate rather than trackers, and this is one of the main reasons for the steady decline in tracker deals.

“During uncertain times, borrowers tend to err on the side of caution; opting for a fixed rate instead of leaving themselves exposed to a potential rate rise. This lack of demand is also depleting variable products, with providers choosing to focus on fixed deals instead. Providers also prefer stability in uncertain times, to avoid losing customers in their mortgage books.

“Borrowers who opted for a cheaper two-year fixed rate, and are coming to the end of their term, are more likely to switch. But with the potential of multiple base rate rises on the horizon, it is more important than ever to ensure they shop around to get the best fixed rate option.”

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